Trading Statement
Computacenter plc
Pre-close Trading Update 12 January 2010
Computacenter is today holding an investor and analyst conference call to
provide an update on trading for the year ended 31st December 2009.
The Group's profit before tax and exceptional items, for 2009 is expected to be
materially ahead of consensus market expectations of £48.4 million [source
Reuters].
At the end of the period net cash excluding customer-specific financing ("CSF")
was £87 million [net cash of £4.6 million at 31st December 2008].  Including
CSF, net funds were £37 million [net debt of £84.6 million at 31st December
2008].
Exceptional items for the year 2009 are likely to be approximately £4.5 million,
£1.5 million less than previously predicted, due to the exceptional gain on the
disposal of our Trade Distribution Division in November 2009.
In our pre-close briefing in January 2009 we laid out a clear programme to focus
the Group's activities, reduce our operating costs and optimise our working
capital. Â A year of working capital improvements can be clearly seen. Â We have
also reduced our operating cost in constant currency by close to £30 million,
almost twice the estimates made 12 months ago.
The Group has continued to develop its contractual services offerings throughout
2009 with investments in new data centre facilities, incremental capacity in our
service desks, enhancements to our customer facing software tools and the
continuing development of the skills of our employees. As our customers seek to
reduce their operating costs, by outsourcing their IT operations, our offerings
continue to gain traction in the market. At a Group level our annual services
contract base exceeds £500 million on 31st December 2009, representing a growth
in excess of 7% over 31st December 2008, based on constant currency.
As we also announced a year ago, we have embarked on a major group wide systems
upgrade implementing a single group wide ERP system which will deliver cost
savings and greater flexibility to the Group. Â We are on target to commence the
rollout of this program in the second half of 2010 and be fully operational
across all major group countries in the second half of 2011. Â The capital
invested in this project to date is £22 million of which £11 million was paid in
2009.  Our estimates are that an additional £10 million will be spent before the
project is completed.
In the UK, revenue in the period fell by 11% to approximately £1.25 billion.
 However, excluding the effect of the exit from Trade Distribution sales,
revenues fell by 6%. Â Pleasingly, the fourth quarter showed a revenue growth
from continuing operations of 2%. Â Services revenue grew by 8% over 2008,
however, this masks the fact that contractual services revenue grew by 13%
whilst professional services revenue declined by 11%. Â The decline in
professional services revenue was caused by the lack of new infrastructure
projects throughout 2009, the pipeline for which has improved steadily towards
the end of the period. Â Product revenue in the fourth quarter was undoubtedly
helped by the VAT increase on 1st January 2010, but the extent to which is
difficult to tell. Â The UK's profit growth was aided materially by the cost
reduction programme introduced a year ago. Â We have seen the UK's overhead
costs reduced by approximately £23 million.
In Germany we have seen another year of encouraging profit growth, despite a
decline in revenues of 1% to approximately €1.03 billion, excluding the
acquisition of becom in late November. Â However, this translates into a growth
of approximately 11% when converted into sterling. Â A combination of prudent
financial management, a small increase in services margin and an improved
product mix have all added to the improved profit performance. Â The recent
acquisition of becom should increase our annual German revenues by around 10% in
2010 and add to our data centre capability.
Whilst overall profit performance in Computacenter France in 2009 has declined a
little on 2008, it is materially ahead of our internal, as well as external
expectations, at the beginning of the year. Â We are pleased with the strategic
progress we have made in 2009 and particularly the growth in services revenue of
11%, in local currency. Â We believe we are making good progress in laying down
firm foundations for long-term profit improvement, which should bear fruit in
the years ahead.
We are pleased with the progress that the Group has made in 2009 particularly
against the strategic objectives laid out a year ago, but we are far from
satisfied and believe that the Group can still make further improvements in the
years ahead. Â Ultimately our profitability is the result of our strategic plan,
how we execute against that plan and the state of the markets in which we
operate. Our markets for contractual services remain positive, as they have over
the last few years and we are encouraged that there have been some signs of
improvement in capital expenditure in the fourth quarter of 2009. Â It remains to
be seen whether this is a temporary improvement or something more fundamental.
 We are clearly buoyed by recent performance and optimistic about the future.
Mike Norris, CEO, commented: Â "Our performance has constantly improved as the
year has progressed and it is worth remembering that consensus market
expectations have already been upgraded by more than £10 million throughout the
course of 2009.
The actions we have taken to restructure and focus our business have enabled us
to significantly reduce our costs in the year and create a step change in our
profits. Â We are also pleased with the growth in our contract base that
underpins profit growth into the future.
While the side of our business that is reliant on capital expenditure remains
uncertain, the contractual services growth and structural changes we have made,
make us confident in the business and future progress in 2010"
Computacenter will announce full year results for the year ended 31st December
2009 on Thursday 11th March 2010.
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